Will data and insights in finance be the greatest opportunity never fulfilled?
Do you think there is a boardroom where the words “we need to get more value from data” have not been uttered over the last few years? It’s unlikely.
We live in a world where we create 2.5 quintillion bytes of data every single day, with 90% of the data in the world today having been created in the last two years alone. With that information comes opportunity – the opportunity to gain a better understanding of your business, customers, prospects and competitors, and also, as a result of that, the opportunity for sales and revenue growth.
There is no wonder that ‘data’ is an obsession of so many C-suites around the UK, and indeed the world. In fact, our recent study, study, Facing Forward: The Evolution of the Modern Financial Leader, found that 92% of respondents note that data is either “extremely” or “somewhat” important in helping them make smart decisions and forecasts.
And yet… data has, for the most part, not fulfilled its business potential. Organisations big and small, across all sectors, are struggling to make the most of it. Whether that is in the ability to access the data, analyse it fully, or turn it into insight – right now, the ‘data insight economy’ is not yet thriving as it should.
“I can see clearly now… no, the data’s wrong”
As part of our Facing Forward study, Dun & Bradstreet decided to look into this issue of data intelligence more closely. We spoke to 200 of the UK’s senior financial professionals to explore what they need from data, what importance they place on it, what they currently get from it, and the challenges they face in maximising data’s incredible potential.
The results painted a picture of a business community scrambling up a never-ending mountain – constantly aware of the power data holds, but not yet able to realise it.
Certainly, there is no doubt of the importance placed on data when it comes to helping businesses make smart decisions or forecasts - on a scale of importance where ‘5’ is ‘extremely important’, 45% selected ‘5’ and a further 37% selected ‘4’. The mean average score was 4.26. At a time where the role of the financial decision makers, and their team, is evolving to be more of a revenue generator than monetary gatekeeper, the people working in these roles are pointing to data as a key enabler.
When asked which ways they believe data can be of most use or benefit to their business, participants chose as their top three answers:
- It helps collate customer intelligence to better understand customers (43%)
- It enables better understanding of the business market in a globalised world (41%)
- It helps improve the business’ internal operational efficiency (39%)
It’s also worth noting that 37% said data was of use because it helps identify new revenue opportunity.
As clear as that positivity is, businesses are equally clear on the challenges they face, as well as their shortcomings in gaining the most from data. Over half (57%) admit that their business lacks the ability to access accurate and current data.
Even if they have accurate, current data, only 44% of businesses have the right tools, such as software and analysis programmes, to make the most of the information at their fingertips.
When asked directly what the biggest barrier is to accessing and analysing data are, there were three clear issues highlighted: “a lack of skills or understanding within the team” (23%), a lack of investment in technology to enable this (21%), and the fact that the data finance leaders receive is sometimes inaccurate (20%).
As a result of these barriers, 65% of FDMs admit it’s difficult to find strategic opportunities in their business’ data.
The consistent issue around a lack of technological investment is particularly concerning given the vast majority (84%) believe technology solutions are vital in helping to analyse data to make smart decisions. And financial leaders are also looking over their shoulders - over half (53%) admit their business has fallen behind competitors in the ability to analyse data, something no business can afford in the current economic climate.
Support finance teams to unlock the power of data
The facts are that businesses know there is potential in data, but they are struggling to maximise it. But what does this really mean? Data analysis is a wonderful thing to get right, but if it’s not capitalised on, will businesses survive and thrive? The short answer, according to the insights in our study, is no.
When asked what are the most damaging consequences of not being able to analyse data quickly and accurately, half (50%) pointed to missed revenue opportunity. This is followed by 42% who said the worst consequence would be “bad risk decisions due to a lack of insight,” and then 38% who answered “missing opportunities to maximise revenue from existing customers/partners.” In short – being unable to access and gain insight from accurate data loses money and creates risk; arguably the two things that make or break a business.
It is the responsibility of business leaders, CEOs and all of the board to help fix this problem. The evolving role of the financial leader should be a positive, but in order to fulfil their two-fold objective - protection and growth - they must gain support for the data and analytical capabilities needed to empower their insight.
They cannot be expected to wait much longer. In a globalised business environment, super-charged by a hugely complex political world, financial leaders are at the forefront of business performance and they require the right tools to drive forward.